Global Operations Management

Managing Quality & Six Sigma (minggu 4)

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Seven Tools for TQM

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 MOTOROLA QUALITY AND STRATEGY DEFINING QUALITY

Implications of Quality Malcolm Baldrige National Quality Award New Mexico Quality Award Cost of Quality (COQ) ISO 9000 ISO14000

INTERNATIONAL QUALITY STANDARDS

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 TOTAL QUALITY MANAGEMENT

Continuous Improvement Employee Empowerment Benchmarking Just-in-Time (JIT) Taguchi Concepts Knowledge of TQM Tools

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 TOOLS OF TQM
Check sheets Scatter Diagrams Cause-and-Effect Diagram Pareto Charts Flow Charts Histograms Statistical Process Control (SPC)

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 THE ROLE OF INSPECTION

When and Where to Inspect
Source Inspection Service Industry Inspection

Inspection of Attributes vs Variables

TQM IN SERVICES

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To Make the Quality Focus Work

Motorola:
Aggressively began a worldwide education program to be sure that employees understood quality and statistical process control Established goals Established extensive employee participation and employee teams

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Ways in Which Quality Can Improve Productivity

Sales Gains
Improved Quality

Improved response Higher Prices Improved reputation

Reduced Costs
Increased productivity Lower rework and scrap costs Lower warranty costs

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Increased Profits

Flow of Activities Necessary to Achieve Total Quality Management

Organizational Practices
Quality Principles Employee Fulfillment Customer Satisfaction
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Organizational Practices
Leadership Mission statement Effective operating procedure Staff support Training Yields: What is important and what is to be accomplished
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Quality Principles
Customer focus Continuous improvement Employee empowerment Benchmarking Just-in-time Tools of TQM Yields: How to do what is important and to be accomplished
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Employment Fulfillment
Empowerment Organizational commitment Yields: Employees attitudes that they can accomplish what is important and to be accomplished

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Customer Satisfaction
Winning orders Repeat customers Yields: An effective organization with a competitive advantage

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Dimensions of Quality for Goods

Operation Reliability & durability Conformance Serviceability Appearance Perceived quality

Quality

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Service Quality Attributes

Reliability Tangibles
Understanding Security
1995 Corel Corp.

Responsiveness Competence
Access Courtesy

Credibility
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Communication

Importance of Quality
Costs & market share Companys reputation Product liability International implications
Market Gains Reputation Volume Price Improved Quality Lower Costs Productivity Rework/Scrap Warranty
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Increased Profits

Malcom Baldrige National Quality Award

Established in 1988 by the U.S. government Designed to promote TQM practices Some criteria

Senior executive leadership; strategic planning; management. of process quality Quality results; customer satisfaction
Corning Inc.; GTE; AT&T; Eastman Chemical.
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Recent winners

Costs of Quality
Prevention costs - reducing the potential for defects Appraisal costs - evaluating products Internal failure - of producing defective parts or service External costs - occur after delivery

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Costs of poor quality are huge, but the amounts are not known with precision. In most companies, the accounting system provides only a minority of the information needed to quantify this cost of poor quality
Juran on Quality by Design, The Free Press (1992), p. 119
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EC Environmental Standard ISO 14000

Core Elements:
Environmental management Auditing Performance evaluation Labeling Life-cycle assessment

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International Quality Standards

Industrial Standard Z8101-1981 (Japan)

Specification for TQM

Common quality standards for products sold in Europe (even if made in U.S.) Standards for recycling, labeling etc.

ISO 9000 series (Europe/EC)

ISO 14000 series (Europe/EC)

ASQC Q90 series; MILSTD (U.S.)

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Traditional Quality Process (Manufacturing)

Customer Marketing Engineering Operations

Specifies Need

Interprets Need

Designs Product Defines Quality

Produces Product Plans Quality Monitors Quality

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TQM
Encompasses entire organization, from supplier to customer Stresses a commitment by management to have a continuing, company-wide, drive toward excellence in all aspects of products and services that are important to the customer.

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Achieving Total Quality Management

Effective Business Employee Fulfillment Quality Principles Organizational Practices
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Customer Satisfaction Attitudes (e.g., Commitment) How to Do What to Do

Demings Fourteen Points

Create consistency of purpose Lead to promote change Build quality into the products Build long term relationships Continuously improve product, quality, and service Start training Emphasize leadership
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Demings Points - continued

Drive out fear Break down barriers between departments Stop haranguing workers Support, help, improve Remove barriers to pride in work Institute a vigorous program of education and selfimprovement Put everybody in the company to work on the transformation
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Concepts of TQM
Continuous improvement Employee empowerment Benchmarking Just-in-time (JIT) Taguchi concepts Knowledge of TQM tools

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Continuous Improvement
Represents continual improvement of process & customer satisfaction Involves all operations & work units Other names

Kaizen (Japanese) Zero-defects Six sigma

1984-1994 T/Maker Co.

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Shewharts PDCA Model

4.Act 1.Plan

Implement Identify the improvement and the plan make a plan

Is the plan working

3.Check

2.Do

Test the plan

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Employee Empowerment
Getting employees involved in product & process improvements

85% of quality problems are due to process & material

1995 Corel Corp.

Techniques

Support workers Let workers make decisions Build teams & quality circles
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Quality Circles
Group of 6-12 employees from same work area Meet regularly to solve work-related problems 4 hours/month Facilitator trains & helps with meetings

1995 Corel Corp.

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Benchmarking
Selecting best practices to use as a standard for performance
Determine what to benchmark Form a benchmark team Identify benchmarking partners Collect and analyze benchmarking information Take action to match or exceed the benchmark
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Resolving Customer Complaints Best Practices

Make it easy for clients to complain Respond quickly to complaints Resolve complaints on the first contact Use computers to manage complaints Recruit the best for customer service jobs

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Just-in-Time (JIT)
Relationship to quality:
JIT cuts cost of quality JIT improves quality Better quality means less inventory and better, easier-to-employ JIT system

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Just-in-Time (JIT)
Pull system of production/purchasing

Customer starts production with an order

Involves vendor partnership programs to improve quality of purchased items Reduces all inventory levels

Inventory hides process & material problems

Improves process & product quality

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Just-In-Time (JIT) Example

Work in process inventory level (hides problems)

Unreliable Vendors

Scrap
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Capacity Imbalances

Just-In-Time (JIT) Example

Reducing inventory reveals problems so they can be solved.

Unreliable Vendors

Scrap
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Capacity Imbalances

Tools for TQM

Quality Function Deployment

House of Quality

Taguchi technique Quality loss function Pareto charts Process charts Cause-and-effect diagrams Statistical process control
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Quality Function Deployment (QFD)

Determines what will satisfy the customer Translates those customer desires into the target design

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Taguchi Techniques
Experimental design methods to improve product & process design

Identify key component & process variables affecting product variation

Taguchi Concepts
Quality robustness Quality loss function Target specifications

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Quality Robustness
Ability to produce products uniformly regardless of manufacturing conditions Put robustness in House of Quality matrices besides functionality

1995 Corel Corp.

1984-1994 T/Maker Co.

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Quality Loss Function

Shows social cost ($) of deviation from target value Assumptions
Most measurable quality characteristics (e.g., length, weight) have a target value Deviations from target value are undesirable

Equation: L = D2C

L = Loss ($); D = Deviation; C = Cost

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Quality Loss Function

High Loss Unacceptable Poor

Loss

Fair Good Best

Low Loss

Target-oriented quality yields more product in the "best" category

Frequency

Conformance-oriented quality keeps products within 3 standard deviations

Lower

Target Distribution of Specifications for Products Produced

Upper

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Quality Loss Function Example

The specifications for the diameter of a gear are 25.00 0.25 mm. If the diameter is out of specification, the gear must be scrapped at a cost of $4.00. What is the loss function?
1984-1994 T/Maker Co.

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Quality Loss Function Solution

L = D2C = (X - Target)2C

L = Loss ($); D = Deviation; C = Cost Item scrapped if greater than 25.25 (USL = 25.00 + 0.25) with a cost of $4.00

4.00 = (25.25 - 25.00)2C

C = 4.00 / (25.25 - 25.00)2 = 64 L = D2 64 = (X - 25.00)264

Enter various X values to obtain L & plot

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Target Specification Example

A study found U.S. consumers preferred Sony TVs made in Japan to those made in the U.S. Both factories used the same designs & specifications. The difference in quality goals made the difference in consumer preferences.
Freq.
Japanese factory (Target-oriented) U.S. factory (ConformanceX oriented)

LSL

Target

USL
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Quality Loss Function; Distribution of Products Produced

High loss Loss (to producing organization, customer, and society) Low loss
Unacceptable Poor Fair Good Best

Quality Loss Function (a) Target-oriented quality yields more product in the best category Target-oriented quality brings products toward the target value Conformance-oriented quality keeps product within three standard deviations Lower Target Specification 6-47

Frequency

Upper

Distribution of specifications for product produced (b)

PDCA Cycle
4.Act: Implement the plan 1.Plan: Identify the improvement and make a plan

3.Check: Is the plan working

2.Do: Test the plan

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Tools of TQM
Tools for generating ideas
Check sheet Scatter diagram Cause and effect diagram

Tools to organize data

Pareto charts Process charts (Flow diagrams)

Tools for identifying problems

Histograms Statistical process control chart

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Pareto Analysis of Wine Glass Defects (Total Defects = 75)

70 88% 54 72% 93% 97% 100% 100%

Frequency (Number)

50 40 30 20 10 0
Scratches

60% 40% 12 5 4
Contamination

2
Misc.

20% 0%

72%

Porosity

16% 5% 4% Causes, by percent total defects

Nicks

3%

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Cumulative Percent

60

80%

Process Chart
Shows sequence of events in process Depicts activity relationships Has many uses
Identify data collection points Find problem sources Identify places for improvement Identify where travel distances can be reduced

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Cause and Effect Diagram

Used to find problem sources/solutions Other names

Fish-bone diagram, Ishikawa diagram

Steps
Identify problem to correct Draw main causes for problem as bones Ask What could have caused problems in these areas? Repeat for each sub-area.

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Cause and Effect Diagram Example

Problem Too many defects

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Cause and Effect Diagram Example

Method
Main Cause Too many defects

Manpower

Material

Machinery Main Cause

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Cause and Effect Diagram Example

Method
Drill

Manpower Overtime
Too many defects Wood Steel Lathe Machinery Sub-Cause
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Material

Cause and Effect Diagram Example

Method
Drill Slow

Manpower
Tired Overtime Old Too many defects

Wood Steel Material Machinery

Lathe

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Fishbone Chart - Problems with Airline Customer Service

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Statistical Process Control (SPC)

Uses statistics & control charts to tell when to adjust process Developed by Shewhart in 1920s Involves
Creating standards (upper & lower limits) Measuring sample output (e.g. mean wgt.) Taking corrective action (if necessary)

Done while product is being produced

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Statistical Process Control Steps

Start Produce Good Provide Service Take Sample

No

Assign. Causes?
Yes

Inspect Sample Create Control Chart

Stop Process Find Out Why

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Process Control Chart

Plot of Sample Data Over Time
80

Sample Value

60 40 20 0 1 5 9 13 Time
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Sample Value UCL Average LCL

17

21

Control Chart

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Patterns to Look for in Control Charts

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Inspection
Involves examining items to see if an item is good or defective Detect a defective product

Does not correct deficiencies in process or product

Issues
When to inspect Where in process to inspect

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When and Where to Inspect

At the suppliers plant while the supplier is producing At your facility upon receipt of goods from the supplier Before costly or irreversible processes During the step-by-step production processes When production or service is complete Before delivery from your facility At the point of customer contact

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Inspection Points in Services

is Organization What Inspected Jones Receptionist Law Office performance Standard Is phone answered by the second ring

Billing
Attorney

Accurate, timely, and correct format

Promptness in returning calls

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Inspection Points in Services

is Organization What Inspected Hard Rock Hotel Reception desk Doorman Room Standard Use customers name Greet guest in less than 30 seconds

All lights working, spotless bathroom

Restocked and charges accurately posted to bill
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Minibar

Inspection Points in Services

is Organization What Inspected Billing Bayfield Community Pharmacy Hospital Lab Nurses Admissions
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Standard Accurate, timely, and correct format Prescription accuracy, inventory accuracy Audit for lab-test accuracy Charts immediately updated

Data entered correctly and completely

Inspection Points in Services

is Organization What Inspected Hard Rock Cafe Busboy Standard Serves water and bread within 1 minute

Busboy

Clears all entre items and crumbs prior to desert

Knows and suggest specials and desserts
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Waiter

Inspection Points in Services

is Organization What Inspected Nordstroms Department Store Display areas Standard Attractive, wellorganized, stocked, good lighting Rotation of goods, organized, clean Neat, courteous, very knowledgeable

Stockrooms Salesclerks

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Inspection Points in Services

Points Organization Some of Inspection
Bank Teller stations Loan accounts Checking accounts

Issues to Consider
Shortages, courtesy, speed, accuracy Collateral, proper credit checks, rates, terms of loans, default rates, loan rates

Accuracy, speed of entry, rate of overdraws

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Inspection Points in Services

Organization
Retail store

Some Points of Inspection

Stockrooms

Issues to Consider
Clean, uncluttered, organized, level of stockouts, amply supply, rotation of goods
Attractive, well-organized, stocked, visible goods, good lighting

Display areas

Sales counters
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Neat, courteous knowledgeable personnel; waiting time; accuracy in credit checking and sales entry

Inspection Points in Services

Organization
Restaurant Kitchen Cashier station Dining areas

Some Points of Inspection

Issues to Consider
Clean, proper storage, unadulterated food, health regulations observed, wellorganized
Speed, accuracy, appearance

Clean, comfortable, regular monitoring by personnel,

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TQM In Services
Service quality is more difficult to measure than for goods Service quality perceptions depend on
Expectations versus reality Process and outcome

Types of service quality

Normal: Routine service delivery Exceptional: How problems are handled

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Goods versus Services

Good Can be resold Can be inventoried Some aspects of quality measurable Service Reselling unusual Difficult to inventory Quality difficult to measure Selling is part of service

Selling is distinct from production

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Goods versus Services continued

Good
Product is transportable Site of facility important for cost Often easy to automate Revenue generated primarily from tangible product

Service
Provider, not product is transportable Site of facility important for customer contact Often difficult to automate Revenue generated primarily from intangible service.
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Service Quality Attributes

Reliability Tangibles
Understanding Security
1995 Corel Corp.

Responsiveness Competence
Access Courtesy

Credibility
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Communication

Determinants of Service Quality

Reliability consistency and dependability Responsiveness willingness/readiness of employees to provide service; timeliness Competence possession of skills and knowledge required to perform service Access approachability and ease of contact Courtesy politeness, respect, consideration, friendliness of contact personnel
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Determinants of Service Quality Continued

Communication keeping customers informed in languages they understand Credibility trustworthiness, believability, honesty Security freedom from danger, risk or doubt Understanding/knowing the customer making the effort to understands the customers needs Tangibles the physical evidence of the service
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